CLOUD COMPUTING AND SOCIAL MEDIA - TexasBarCLE · "Cloud Computing" and Social Media Chapter 15....

"CLOUD COMPUTING" AND SOCIAL MEDIA

DAVID A. CHAUMETTE De la Rosa & Chaumette

1330 Post Oak Blvd. Suite 2250

Houston, Texas 77056

(713) 395-0991

(713) 395-0995 (fax)

[email protected]

CHANTEL CREWS

Ryan & Sanders, LLP

320 Texas Ave., Ste. 300

El Paso, Texas 79901

(915) 351-1100 x. 106

[email protected]

State Bar of Texas

9th

ANNUAL

ADVANCED BUSINESS LAW COURSE October 13-14, 2011

Dallas

CHAPTER 15

mailto:[email protected]

1330 Post Oak Blvd. Suite 2250

Houston, Texas 77056 tel: (713) 395-0991 fax: (713) 395-0995

David A. Chaumette is a name partner with the litigation boutique De la Rosa & Chaumette, where he focuses on commercial litigation and electronic discovery. Mr. Chaumette has authored over sixty articles on several topics and teaches electronic discovery at the University of Houston Law Center.

Mr. Chaumette is an active member of the American Bar Association, Houston Bar Association, and the State Bar of Texas. He is presently the Treasurer of the Houston Bar Association. He has also chaired numerous HBA committees, including the Administration of Justice and Law Day Committees and the Corporate Counsel Section. He is also active in the National Bar Association and the Houston Lawyers Association, including serving a term as the Chair of the Houston Lawyers Foundation. He is a Past President of the Houston Young Lawyers Association, a Past Chair of Leadership Houston, a Past Chair of the Dispute Resolution Center in Houston, and a Past President of the Houston Lawyer Referral Service.

Mr. Chaumette has also been active in the community. He sits on the Board of Neighborhood Centers, Inc., and the First Colony Little League (where he has previously served as President). In 2004, David was selected as one of the Five Outstanding Young Texans by the Texas Junior Chamber of Commerce.

Mr. Chaumette has a law degree from the University of Chicago, and two degrees in Aerospace Engineering, one from Stanford University and one from Princeton University. In 2004, he was selected as one of the Five Outstanding Young Texans by the Texas Junior Chamber of Commerce, and, in 2009, he was recognized as an Extraordinary Minority in Texas Law by Texas Lawyer.

Mr. Chaumette is admitted to practice before courts across Texas and the United States, including the U.S. Supreme Court. Mr. Chaumette is also a member of the American Law Institute and the Litigation Counsel of America.

Mr. Chaumette is married to Jacqueline Baly Chaumette, City Councilmember of Sugar Land, Texas, and President of Baly Projects, LLC, a consulting firm. They have two sons, Raphael and Alexandre.

David A. Chaumette Partner

tel: (832) 485-5907 [email protected]

www.delchaum.com

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Chantel Crews Ryan & Sanders, LLP

320 Texas Ave., Ste. 300 El Paso, Texas 79901 (915) 351-1100 x. 106

[email protected]

OCCUPATION: Of Counsel, Ryan & Sanders, LLP, February 2008 - present Scott, Hulse, Marshall, Feuille, Finger & Thurmond, P.C., 1998 – 2008, Shareholder 2006-2008

PRACTICE: General Liability, Fiduciary, Commercial and Trust and Estate Litigation EDUCATION: Texas Tech University School of Law, J.D., 1998 Southern Methodist University, B.B.A., 1994 PROFESSIONAL ASSOCIATIONS: Best Lawyers in America, Commercial Litigation 2010, 2011 State Bar of Texas

Course Director, 2010 Advanced Civil Trial Seminar El Paso Bar Association

Immediate Past President 2011-2012 President 2010-2011

Texas Association of Defense Counsel Vice President of Programs 2009-2011 Board of Directors, District #7 Director 2006-2010 Recipient of TADC President’s Award 2006 Board of Directors, Director at Large 2005-2006 El Paso Young Lawyers Association El Paso Outstanding Young Lawyer of the Year 2002-2003 Director 1999-2008 El Paso Women’s Bar Association

President 2002 - 2003 Texas Rising Stars 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011 52nd Annual National Security Seminar, U.S. Army War College, Carlisle Barracks, Pennsylvania, 2006. CIVIC ORGANIZATIONS: Junior League of El Paso, Member, 2001 – President, 2011-2012

President-Elect, 2010-2011 Vice President Membership, 2009-2010 Vice President Finance Council, 2007-2008 Vice President Community Projects, 2006-2007 YWCA REACH Award Recipient, Professional Category 2006 Inaugural El Paso Women of Impact Award Recipient 2010 American Heart Association Board of Directors, El Paso Division, 1999 – 2008

Chairman, 2004 – 2005 Leadership El Paso, Class XXV, 2003 Delta Delta Delta, El Paso Alumnae Chapter, 1998 – President, 2003 – 2005 PUBLICATIONS AND SPEECHES Speaker at State Bar of Texas and Texas Association of Defense Counsel programs

TABLE OF CONTENTS

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I. INTRODUCTION. ............................................................................................................ 1

II. ELECTRONIC DOCUMENTS AND OLD FASHIONED DISCOVERY. ..................... 1

A. Electronically Stored Information Versus Paper. .................................................. 3

III. THE RULES OF E-DISCOVERY. ................................................................................... 7

IV. FIRST STEPS TO E-DISCOVERY CHALLENGES. ...................................................... 9

V. ETHICAL CONSIDERATIONS. .................................................................................... 17

A. Professional Responsibilities. .............................................................................. 18

B. Third Parties. ........................................................................................................ 19

VI. MANAGING A PRODUCTION. .................................................................................... 20

A. Types and Amount of Data. ................................................................................. 22

B. Data Collection. ................................................................................................... 23

C. Filtering ................................................................................................................ 25

VII. BRINGING IN ADDITIONAL TROOPS: THE OUTSIDE E-VENDOR. ................... 26

A. Processing. ........................................................................................................... 27

B. Finding the right online repository ...................................................................... 28

C. Dealing with a Production Team. ........................................................................ 30

VIII. PRIVILEGE. PRIVILEGE. PRIVILEGE...................................................................... 31

A. Rule 502. .............................................................................................................. 31

B. The Privilege Log. ............................................................................................... 32

C. The Privilege After Production. ........................................................................... 33

D. Hopson and Victor Stanley. ................................................................................. 33

E. The Future. ........................................................................................................... 36

F. Employees and Their Emails. .............................................................................. 36

IX. TRANSLATING THE BYTES: USING E-DOCUMENTS IN LITIGATION. ............ 37

A. Reviewing Discovery Results for Useful Information. ........................................ 38

B. Getting It Admitted. ............................................................................................. 39

X. EDUCATING CLIENTS. ................................................................................................ 45

A. Document Preservation Programs........................................................................ 45

XI. E-DISCOVERY IN UNITED STATES FEDERAL AGENCIES. ................................. 55

XII. CONCLUSION. ............................................................................................................... 56

"Cloud Computing" and Social Media Chapter 15

TABLE OF CONTENTS (continued)

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APPENDIX A ............................................................................................................................. 57


I. Introduction.

The electronic revolution has changed the way business is done. In the past, hard copies of paper documents occupied large physical spaces and represented a significant part of the discovery process. Today, in contrast, almost all business communication is conducted electronically from word processing programs to internal and external e-mail accounts. Researchers at the University of California at Berkeley announced that 93% of all information created during 1999 was generated in digital form, on computers of some sort.1 That means that only 7 Percent was generated using other media, like paper, phonograph records, clay tablets or smoke signals.2

This generation of communication has created new efficiency and effectiveness of business management in many respects. The increased presence of technology in the workplace, however, has also required significant changes in the way litigation, and specifically discovery, is handled. Adapting to these changes, litigants face an ever-changing arena referred to as electronic discovery, which can be a veritable treasure trove or minefield depending on the level of preparation taken by the client and the client’s counsel prior to the arrival of any legal dispute.

The limited number of overarching rules to govern electronic discovery frequently leads to unique burdens for parties seeking to comply with a request for electronic data. Electronic discovery can be expensive, difficult, time-consuming, and sometimes fatal to the underlying case — typically not results that satisfy clients.

At this point, it is difficult for companies to ignore the issues related to electronic discovery Consider this: as of 2003, one in 20 companies have battled a workplace lawsuit triggered by e-mail, and 14 percent of companies have been ordered by a court or regulatory body to produce employee e-mail.3 Since that time, the need to focus on its issues has only grown. Even if you have not been asked to produce electronic documents to date, learning about electronic discovery now can be very beneficial when you do receive your first request for electronic data, and it can lessen your risk of sanctions due to a lack of understanding regarding the preservation of electronic evidence. This paper outlines some of the major issues and considerations for lawyers involved in the electronic discovery process. It is difficult to provide a comprehensive overview of all the issues related to electronic discovery, however, this paper seeks to set forth the major issues and provide some guidance as to where additional information may be found.

II. Electronic Documents and Old Fashioned Discovery.

In the United States, the issue of “e-discovery” was being addressed ad hoc in the federal courts until the Civil Rules Advisory Committee of the United States Judicial Conference adopted new rules for discovery of “electronically stored information,” which

1 Kenneth J. Withers, Federal Judicial Center, Electronic Discovery (presentation at National

Workshop for U.S. Magistrate Judges, June 12, 2002). 2 Id. 3 American Management Association, 2003.


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became effective on December 1, 2006. 4 According to the Advisory Committee, the new rules are intended “to be broad enough to cover all current types of computer-based information, and flexible enough to encompass future changes and developments.”5

Even before the new rules have been implemented, the Texas and Federal Rules of Civil Procedure, as well as case law interpreting the rules, already recognized an obligation to produce electronic data in response to requests for production (even prior to the amendments to the Federal Rules).6 Texas Rule of Civil Procedure 196.4 specifically addresses the duties of the requesting and responding parties regarding the production of electronic or magnetic data. Under that rule, the requesting party “must specifically request production of electronic or magnetic data and specify the form in which the requesting party wants it produced.”7 If the responding party cannot produce the material in the form requested after expending reasonable efforts, the party must state an objection in compliance with the terms of the rules.8 If the court orders the responding party to comply with the request, the court must also order that the requesting party pay the reasonable expenses of any extraordinary steps required to retrieve and produce the information.

Similarly, in federal court, Federal Rule of Civil Procedure 34 requires production of electronic data in “reasonably usable form.” This rule allows a request for production of “other data compilations from which information can be obtained, translated, if necessary, by the respondent through detective devices into reasonably usable form . . . [.]”9

Both Texas and federal courts mandate that parties produce data in electronic form, even after the information has already been produced in “paper” form. This requirement is not new.10 In Ormsby, the plaintiff had requested documents concerning a roadway where a fatal accident had occurred, but the city argued it did not withhold documents because it supplied the information as a memorandum rather than a computer printout.11 The court disagreed, and compelled the production of the electronic version of the information.12 Therefore, the court held the failure to produce the documents in an

4 The Advisory Committee report, dated May 5, 2005, can be found at http://www.uscourts.gov/rules/

Reports/CV5-2005.pdf. The rules are applicable in the federal courts. State courts in the United States must develop their own rules, state by state, although the Conference of Chief Judges of the State Supreme Courts has issued guidelines on e-discovery which, for the most part, mimic the federal e-discovery rules. See Guidelines For State Trial Courts Regarding Discovery Of Electronically-Stored Information (August 2006) which can be found at http://www.ncsconline.org/WC/Publications/CS_ElDiscCCJGuidelines.pdf.

5 Id. 6 Many of these issues are discussed in Tammy Wavle Shea, Discovery of Electronic Information, 40

HOUS. LAW. 29, 30 (Jan/Feb. 2003). 7 TEX. R. CIV. P. 196.4. 8 Id. 9 FED. R. CIV. P. 34. 10 City of Dallas v. Ormsby, 904 S.W.2d 707, 712 (Tex. App.—Amarillo 1995, writ denied). 11 Id. at 710-11. 12 Id.


http://www.uscourts.gov/rules/%20Reports/CV5-2005.pdfhttp://www.uscourts.gov/rules/%20Reports/CV5-2005.pdfhttp://www.ncsconline.org/WC/Publications/CS_ElDiscCCJGuidelines.pdf

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appropriate manner was sanctionable.13 For example, the court in Victor Stanley II recently described a party’s actions in this manner:

“Plaintiff has proved grave misconduct that was undertaken for the purpose of thwarting Plaintiff’s ability to prove its case and for the express purpose of hamstringing this Court’s ability to effect a just, speedy, and inexpensive resolution of a serious commercial tort. The prejudice to Plaintiff is clear and has been described in each of the sections above. It is helpful, but of little comfort, that Defendants themselves agree with my assessment that the lost or destroyed ESI was relevant, and its absence as evidence prejudicial to Plaintiff.”14

This is not the description you want to read about your client. More recently, the fight over form of production is focused on cost issues, which will be discussed in further detail below. Interestingly, several companies now find it easier to produce electronic data electronically, however there are traps regarding the form of production which should be addressed.

A. Electronically Stored Information Versus Paper.15

The digital world differs from the paper world in many respects, but there are several key differences.

1. Everyone Is A File Keeper.

In the paper world, documents are given to staff persons for filing. In the digital world, every computer user who sends or receives e-mail, creates word processing documents, prepares spreadsheets or information slides, or maintains databases decides whether to store files and has the ability to modify or delete a file. Even if the digital file keeper takes no action, eventually e-mail will move to backup tape and usually that backup tape will be overwritten after a period of time, and the file may be lost forever.16

In the paper world, when an employee leaves employment, the employee’s documents, already archived, may remain in that state until records retention schedules call for their destruction. In the digital world, when an employee leaves employment, the employee’s desktop or laptop hard drive (or both) may be reformatted, destroying all data

13 Id. 14 Victor Stanley v. Creative Pipe, 2010 WL 3530097 (D. MD. Sept. 9, 2010). The Court also included a

12 page summary of sanctions opinions from the federal courts. That summary is attached to this paper.

15 This portion of the paper is adapted from portions of Barkett, E-Discovery For Arbitrators Under the IBA Rules For Taking Evidence (Shook, Hardy & Bacon 2007), available at www.shb.com.

16 An individual user can archive an e-mail in local storage media, and that may be the only place to find a document. See Hynix Semiconductor Inc. et al. v. Rambus Inc., 2006 U.S. Dist. LEXIS 30690, *27-28 (N.D. Calif. Jan. 5, 2006) (explaining that Rambus changed to a backup recycling schedule of three months and that employees should create their own archive copies of documents; for e-mail that meant printing them or keeping them “on your hard drive”).


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on the drives unless someone decides that there are litigation reasons to maintain that employee’s digital status quo.17

In the paper world, when, say, a major construction project was completed, all of the paper associated with the project might be boxed and stored in a warehouse. In the digital world, the desktop and laptop computers used by everyone in the field will be moved to the next job and file management will be a function of project organization or perhaps serendipity, depending upon the individual file-keeping habits of each person on the job.

17 See, e.g., Cache La Poudre Feeds, LLC v. Land O’Lakes, Inc. et al., 2007 U.S. Dist. LEXIS 15277 (D.

Colo. Mar. 2, 2007) (wiping clean the computer hard drives of former employees, among other conduct, was sanctionable under the circumstances, but since the prejudice was not substantial, sanctions were limited to $5,000 and reimbursement of certain court reporting costs).


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2. Metadata.

A second key difference is the existence of “metadata.” Metadata “is information about a particular data set or document which describes how, when and by whom it was collected, created, accessed, modified and how it is formatted.”18

3. Deleted Data.

A third key difference is that digital data can survive deletion, while paper that is discarded is not likely to be found again. The Sedona Glossary (p. 11) gives this definition of “deleted data:”

Deleted Data is data that existed on the computer as live data and which have been deleted by the computer system or end-user activity. Deleted data may remain on storage media in whole or in part until they are overwritten or “wiped.” Even after the data itself have been wiped, directory entries, pointers or other information relating to the deleted data may remain on the computer.

So, for example, a computer user moves data to “trash” or the “recycle bin.” Until the trash or bin is emptied, the data remain fully restorable, often by any user. Once the trash or bin is emptied, the data may be restored by forensic experts who may be able to reconstruct data fragments to recreate the deleted file, unless the storage media in question has been “wiped,” typically by software designed to achieve this aim.19

4. Multiple Sources of Data.

A fourth key difference is the proliferation of data sources over paper. A “key player” in any dispute may have information stored in a number of places from his or her office computer, to that user’s home computer, to administrative assistant’s computers, and so on and so on. This proliferation can be very expensive to deal with, if the company is not prepared.

5. Backup Tapes.

Another key difference between the paper and electronic worlds is the existence of backup tapes,20 typically used for disaster recovery purposes. Backup tapes are, 18 This definition comes from The Sedona Conference Glossary: E-Discovery & Digital Information

Management, p. 28 (May 2005) available at http://www.thesedonaconference.org/content/ miscFiles/ tsglossarymay05.pdf (Sedona Glossary).

19 See, e.g., Kucala Enterprises, Ltd v. Auto Wax Co., Inc., 2003 U.S. Dist. LEXIS 8833 (N.D. Ill. 2003) (discussing a program called “Evidence Eliminator” which is designed to clean computer hard drives of data that may have been deleted by the user but still remain on the hard drive).

20 The Sedona Glossary defines “backup tapes” as follows: “Magnetic tapes used to store copies of data, for use when restoration or recovery of data is required. Data on backup tapes are generally recorded and stored sequentially, rather than randomly, meaning in order to locate and access a specific file or data set, all data on the tape preceding the target must first be read, a time-consuming and inefficient process. Backup tapes typically use data compression, which increases restoration time and expense, given the lack of uniform standards governing data compression.”


http://www.thesedonaconference.org/content/%20miscFiles/%20tsglossarymay05.pdfhttp://www.thesedonaconference.org/content/%20miscFiles/%20tsglossarymay05.pdf

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typically, not reasonably accessible, as compared to “active data” which can be easily accessed by a user.21 Furthermore, backup tapes contain extraordinary amounts of information.

Perhaps as significant as volume, backup tapes may be the only place that certain documents reside. Unless they were printed, prior versions of a document may only exist on backup because they would be overwritten each time a computer user edits the file contained in active data storage. An individual that does not archive an email on his or her individual hard drive will lose that e-mail to backup after a period of time. Backup tapes may also reveal whether an individual has deleted an e-mail. However, backup tapes will not capture an e-mail received by an individual and deleted the same day.

Retrieval of information from backup tapes can also be costly. There is both the cost to retrieve and the cost to review. A well known example, in Zubulake v. UBS Warburg LLC, 216 F.R.D. 280 (S.D.N.Y. 2003),22 there was a battle over the production of 77 backup tapes. The district court ordered UBS Warburg to restore at its expense five tapes to give the district court an idea both of the cost to restore and the relevance of the information contained on the backup tapes. The cost to restore five backup tapes was $19,003.43 which resulted in the production of 600 e-mails responsive to the plaintiff’s request for production. UBS Warburg estimated that the cost to restore the remaining 72 tapes was $273,649.39 and the cost to review the data before production would be $107,694.72.

6. Key Players.

In the paper world, there is not necessarily a premium placed on the correct identification of persons with knowledge or information about a claim—”key players”—because paper is kept for a long time by many companies. In the electronic world, the identification of key players is much more significant because a delayed identification of key players can result in the loss of relevant information.

21 One court has described the difference between data that are “accessible” and data which are

“inaccessible.” Data which are (1) “online” or archived on current computer systems (such as hard drives); (2) “near-line” such as that stored on optical disks or magnetic tape that is stored in a robotic storage library from which records can be retrieved in two minutes or less; or (3) “off-line” but in storage or archives, such as removable optical disk (e.g., CD-ROM or Digital Versatile Disc (DVD)) or magnetic tape media (e.g., Digital Linear Tape (DLT) tape), are readily accessible using standard search engines because the data are retained in machine readable format. Zubulake v. UBS Warburg LLC, 217 F.R.D. at 318-320. On the other hand, (4) routine disaster recovery backup tapes that save information in compressed, sequential, and non-indexed format, and (5) erased, fragmented, or damaged data, are generally inaccessible, because a time-consuming, expensive restoration process is required to obtain information. Id. at 319-320.

22 Zubulake alleged she was a victim of gender discrimination and was eventually terminated and then filed an additional claim that she was retaliated against for complaining about the employment practices of her supervisor. 216 F.R.D. at 281. The district court explained that under the federal rules of civil procedure, the presumption is that the producing party pays for production of accessible data. In addition, the district court held that the cost to review should always be borne by the producing party. With respect to the cost to retrieve, the district court evaluated each of seven factors identified by the district court as relevant to the determination of who should pay this cost, and decided to shift 25% of the cost to the requesting party, Zubulake. 216 F.R.D. at 283-90.


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For example, in Consolidated Aluminum Co. v. Alcoa, 2006 U.S. Dist. Lexis 66642 (E.D. La. July 19, 2006), four key players initially were identified in November 2002 when Alcoa sent a demand letter to Conalco for costs associated with an environmental cleanup. Conalco then decided to sue in 2003 seeking a declaration of nonliability. In 2005, Conalco issued a request for production which prompted Alcoa to identify eleven more key players. In the interim, however, the emails of these eleven individuals had been erased because of Alcoa’s email backup retention protocol.23 Conalco moved for sanctions. The district court refused to award punitive sanctions, but required Alcoa to pay the reasonable costs and fees Conalco incurred to bring the motion for sanctions and also to pay the cost of re-deposing up to thirteen people, in addition to allowing Conalco to serve certain additional discovery requests.

7. Forms Of Production.

In the world of electronically stored information, there are also choices on the form of production. A requesting party may seek production in “native” format: the file as it exists on the storage media on which it is stored with its associated metadata. A producing party may prefer to produce documents in “Tagged Image File Format” (TIFF)24 or “Portable Document Format” (PDF)25 in order to bates-label the documents. Vendors should be able to link meaningful metadata to an associated TIFF or PDF image depending upon the agreement of parties or the scope of a court’s order on production of electronically stored information.26

III. The Rules of E-Discovery.

As of December 1, 2006, Rules 16, 26, 33, 34, 37, and 45, and Form 35, changed in several ways, including: 23 Alcoa submitted an affidavit describing the protocol: “Once every week, all messages older than thirty

days in a user’s Exchange mailbox are moved to a “System Cleanup” folder. At the same time, all messages older than fifteen days (forty-five days total) in a user’s System cleanup folder are deleted and are no longer directly recoverable by the user. . . . In addition, Alcoa’s disaster recovery system retains email for the trailing six months.” That prompted the magistrate judge to say: “Thus, it is possible that relevant emails for the six months prior to November 2002 could have been retrieved, had Alcoa properly suspended its routine document destruction policy when it became aware of potential litigation with Consolidated in November 2002.”

24 The Sedona Glossary defines TIFF as: “One of the most widely used and supported graphic file formats for storing bit-mapped images, with many different compression formats and resolutions. File name has .TIF extension. Can be black and white, gray-scaled, or color. Images are stored in tagged fields, and programs use the tags to accept or ignore fields, depending on the application.”

25 The Sedona Glossary defines PDF as: “An imaging file format technology developed by Adobe Systems. PDF captures formatting information from a variety of applications in such a way that they can be viewed and printed as they were intended in their original application by practically any computer, on multiple platforms, regardless of the specific application in which the original was created. PDF files may be text-searchable or image-only. Adobe® Reader, a free application distributed by Adobe Systems, is required to view a file in PDF format. Adobe® Acrobat, an application marketed by Adobe Systems, is required to edit, capture text, or otherwise manipulate a file in PDF format.”

26 According to the Sedona Glossary definition of “native format,” “static” formats such as TIFF or PDF “are designed to retain an image of the document as it would look viewed in the original creating application but do not allow metadata to be viewed or the document information to be manipulated.”


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• Early Discussion of E-Discovery Issues: Rule 16(b), Rule 26(f), & Form 35. The new rules amend Rules 26(f) and 16(b) as well as Form 35 to prompt counsel to discuss early on how to handle e-discovery issues. This will necessitate additional or more extensive interaction with opposing counsel at an earlier point in the case. The question is whether—even before the scheduling conference—these concerns are being raised too late?

• Definition of Electronically Stored Information. Rule 34(a). Revised Rule 34 indicates that electronically stored information is subject to production and discovery. This is not a significant change.

• Form of Production: Rule 34(b). The revised Rules allow requesting parties to specify production format, but the rules do not direct counsel to pick one production format over another. The key point here is to determine the form of production early, with an emphasis on the need for parties to try to come to an agreement as early as possible.

• Option to Produce Electronically Stored Information in Response to Interrogatories: Rule 33(d). Under the new Rule 33, the responding party is allowed to produce electronic data when responding to interrogatories as long as the requesting party is able to locate and identify the information as easily as the responding party. There is a significant trap here contained in the Committee’s notes. In the old days, litigants used to respond by saying that the answer is in the documents. Today, that response may allow the opposing counsel to come in and inspect your client’s computers, which may not always be a desired outcome.

• Reasonably Accessible Information: Rule 26(b)(2)(C). This change requires the requesting party to obtain a court order compelling the responding party to produce the information that is not “reasonably accessible.” This has the potential to be a key battleground issue in the future.

• Belated Assertion of Privilege: Rule 26(b)(5)(B). A party who unintentionally discloses privileged information may get it back from the receiving party unless the receiving party can prove it is entitled to the information. This issue is one of the key battlegrounds in this area.

• Safe Harbor on Sanctions: Rule 37(f). The safe harbor provision prevents judicial sanctions for failing to hand over electronically-stored information if the information was destroyed during the “good faith” routine use of a computer system. After much debate about this particular provision, the new rule here is weak and does not provide much protection to companies.

The new rules force companies to determine “reasonable” preservation steps. Data is regularly destroyed through automatic processes, and merely opening a document or starting a computer can alter files and metadata. As such, corporations and law firms


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should be concerned that they cannot act quickly enough to preserve data and avoid allegations of spoliation.27 The failure to understand this can be extremely costly.

IV. First Steps to E-Discovery Challenges.

The proliferation of data, combined with heightened scrutiny from courts, forces practitioners to consider these issues from an early point in time. That might be before any litigation is filed or when the company first sees a demand letter. However, even if nothing is done early, the company should take proactive steps as soon as it realizes that the potential for these issues exist. The question is what do those early steps look like.

1. Familiarity Breeds Consent.

A good first step takes place before anything actually even begins. By understanding the structure of the client’s organization, attorneys can take the first step toward identifying relevant electronic data and the sources. This means meeting with the client’s IT staff and its personnel so that, when the need arises, the client can immediately begin to preserve data. At a minimum, this meeting should cover: the computer systems in use, the document retention program in place, relevant legacy problems, the nature of any encrypted data, and the physical location of any potentially discoverable data.28 One of the bigger challenges may be “buy in” from the corporate management, but given the increased technological sophistication of the workplace, this task should be easier today than in the past.

This meeting can have several other benefits as well, mostly related to improved communication between the different people and departments. For example, many companies today have policies in place regarding discrimination in the workplace. Others focus on safety issues, but few have training on appropriate use of e-mail and other technology assets of the company. There are several steps that can improve the company’s position and reduce litigation costs before those costs are incurred. However, these steps require a coordinated approach between diverse parts of the company, from IT to records to legal.29

2. Understanding Your Data.

Everyone knows what e-mail is, but fewer contemplate how pervasive a single e-mail can be or how many different forms of electronic information can exist within one company. A single piece of electronic information, like an e-mail, can be stored in numerous places ranging from earlier versions and drafts of documents to “deleted” e-mail stored on back-up tapes. If your client has changed or upgraded software at any point, there may also be responsive discoverable documents in numerous formats. The

27 Spoliation is discussed further below. 28 The real first step is even understanding the vocabulary of electronic discovery. For example, “legacy

data” is data which is read by systems no longer in use by the client in question, such as WordStar or Lotus 1-2-3. This data might be relevant but hard to access.

29 This, of course, presumes that there is a records department in the company which is not always the case. Nevertheless, there is always a records function.


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proliferation of personal digital assistants (or PDAs) has only exacerbated these problems.

E-mail can be particularly problematic, not only because of its sheer volume, but because there is no logical filing method for most e-mail systems. As a result, business e-mails are mixed with personal e-mails, ranging from love letters to chain-forwarded jokes. Accordingly, retrieval and screening of e-mail messages for relevance and privilege can be difficult, costly, and time consuming. While requests for e-mail tend to be most common, other types of electronic information may be valuable.

Generally, electronic information falls into three categories: active, backup, and residual. Active data files are information readily available and accessible from personal computers. This active data can include word processing documents, spreadsheets, databases, and calendars, as well as e-mail, and is relatively easy to view and obtain. Easy here means inexpensive, therefore, unless special circumstances exist, companies should limit the production (but not necessarily their collection and preservation) efforts to active data.

Backup data are usually files created automatically by various applications. These documents were never saved, and the user probably may not even be aware that they exist. Nevertheless, they may still be retrievable, and therefore discovered. Each time a file is automatically backed up, a “file clone” is created and stored on the user’s hard drive, but usually not on the network server. As a result, these back-ups continue to reside on the user’s hard drive even after the document or file is deleted from the network server. These documents are rarely well organized, at least not from a human’s point of view.

Another source of backup electronic discovery is “back-up tapes.” These tapes capture everything from e-mail messages, old drafts of word processing documents, and hidden information on spreadsheets. They typically record when the document was created, the author of the document, subsequent edit dates to the document, and which users have access to the revised document, as well as the number of versions of the document. However, the data on back-up tapes are not organized for retrieval of individual documents or files, but for wholesale, emergency uploading onto a computer system. Therefore, special programs may be needed to retrieve specific information, and the process can be costly and time consuming.

In the past, back up tapes were the source of great consternation and concern. While it was once true that restoring back up tapes was expensive, it is more economical now. The infamous Morgan Stanley case turned on the production of back up tapes. Morgan Stanley could not restore its tapes in a timely fashion and got an adverse inference instruction against it.30 Prepared future litigants know that if back up tapes are only used for disaster recovery then it is much less likely that the company will need to restore those tapes.

30 Morgan Stanley made other mistakes as well on its way to the $1.6 billion verdict.


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This issue is related to the “reasonably accessible” discussion above. Generally, information should be produced only if it is reasonably accessible. FED. R. CIV. P. 34. This leads to some interesting legal challenges in situations where the data becomes less accessible after the date when the duty to preserve is triggered (based on Brotherton or some similar basis). In Best Buy Stores, L.P. v. Developers Diversified Realty Corporation, Best Buy had developed a database as part of an effort unrelated to the pending litigation.31 At some point during the litigation, Best Buy decided to store the data underlying the database on backup tapes – which made the data much harder to search or restore. That data had previously been live data and readily accessible, but the court held that there was no duty to convert the data back to an accessible form, in part because the restoration costs were too high.32 However, other courts have come to the opposite conclusion: that making relevant data less accessible is a “violation of the preservation obligation.”33

Residual data are data that continue to exist after the user has “deleted” files. Hitting the “delete” key merely renames the file, making it available for overwriting if space on the hard drive is needed in the future. One could think of deletion as removing the card describing a book from the card catalog at the local library without removing the book from the shelves. Because the information does not vanish at the point where the user deletes it, it continues to exist on the hard disk space until the space it occupies is overwritten. Computer forensic experts can recover this information because it may have been backed up before it is actually overwritten and because the deleted files may have been only partially overwritten. This process can be extremely expensive and may not yield any “smoking guns.”

3. Data Maps and People Maps.

The process of electronic discovery can be inefficient and ultimately unproductive if a lawyer does not know who to ask or how to ask for the information sought. As most lawyers know, there are many individuals in the business world who rely heavily on the experience and knowledge of secretaries and others who perform electronic data entry. While these data entry personnel are not likely to yield the information a lawyer may be seeking during the course of discovery, the relationship is emblematic of a common hurdle facing those seeking complex electronic discovery. Specifically, the person a lawyer may have asked to respond may not be knowledgeable about the specific information requested. For this reason, it is essential to consider questioning representatives from the opposing party who are intimately familiar with the hardware, software, and networking system employed by the business entity.

For example, it may be worthwhile to depose the information technology (IT) manager, the chief information officer, or someone in a similar role in order to determine the parameters of the opposing party’s computer system. This person may also be the most informed about the company’s electronic document retention policy.

31 247 F.R.D. 567 (D. Minn. 2007). 32 Id. at 570-71. 33 Treppel v. Biovail, 233 F.R.D. 363, 372 n.4 (S.D.N.Y. 2006).


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Interrogatories may also represent a useful tool to probe for information about the opposition’s policies regarding the maintenance of electronic information. The specifics of such policies should help to determine the scope of the initial requests. Key questions to address in the deposition or interrogatory include the number, types, and locations of all electronic communication devices used (including desktops, laptops, PDA’s, cell phones, etc.), electronic records management policies and procedures, and corporate policies regarding employee use of company computers, data, and other technology.

It is often useful to interview individual data custodians so that the lawyer can best understand how the data is organized and what it contains. The focus of such an interview would be what resources the custodian uses, as well as more substantive issues as well.34

With this information in hand, a lawyer can conduct a more focused, reasonable, and cost-effective search that will help undermine objections that discovery demands for electronic evidence are overbroad, unduly burdensome, or cumulative.35 Thus, time spent analyzing personnel and corporate structure could be valuable in locating an employee whose deposition will shape the initial discovery requests.

4. Litigation Holds

At a high level, a company’s document retention policy should retain only e-mails with business record significance, to avoid the dangers associated with disclosing damaging information that might in personal communications. Such a system should include “litigation holds” to prevent destruction of documents related to ongoing or anticipated litigation. That general pronouncement is often of little use in real world cases, as litigants in recent cases have discovered. In fact, the dangers in this area have proven quite significant. The challenge to determine proper scope of litigation holds is hardly new, although it has changed over time. For years, companies have understood that failing to implement and monitor document retention programs effectively can result in severe consequences, even without intentional wrongdoing.36

Having no hold policy in place can be worse. In Keithley v. The HomeStore.com, Inc., the court sanctioned the defendant, HomeStore.com, more than $1.4 million, and entered multiple adverse inferences due to its “lackadaisical attitude with respect to

34 Among topics to be covered should be passwords, all email accounts used, and any idiosyncratic

shorthand used at the company or in the industry. 35 See, e.g., Carbon Dioxide Indus. Antitrust Litig., 155 F.R.D. 209, 214 (M.D. Fla. 1993) (“[D]epositions

to identify how data is maintained and to determine what hardware and software is necessary to access the information are preliminary depositions necessary to proceed with merits discovery.”); Demelash v. Ross Stores, Inc., 20 P.3d 447, 520 (Wash. Ct. App. 2001) (“[A] trial court must manage the discovery process in a fashion that promotes full disclosure of relevant information while at the same time protecting against harmful side effects.”).

36 Remember In re Prudential Sales Practices Litigation, where the court sanctioned Prudential for its “haphazard and uncoordinated” policies on preservation. 169 F.R.D. 598, 615 (D.N.J. 1997).


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discovery.”37 The Keithley defendant conceded that no litigation hold policy existed during the relevant time periods underlying the claims.

So When Does the Duty Begin? How Does One “Know When to Hold?” Knowing when a litigation threat is “real” is subjective – and much easier in retrospect. This decision often requires analyzing overall claim risk, the scope of claim knowledge within your company, and the risk of data destruction absent a legal hold. No single (or easy) answer exists. The economic situation facing most companies, and the expense associated with establishing and maintaining a litigation hold, creates significant pressure to respond only when the litigation threat is absolutely concrete.

Yet, all is not lost. Courts are generally sympathetic to these challenges as companies attempt to determine when the preservation obligation arises. For example, in a non-e-discovery case, the Texas Supreme Court held that a producing party does not abuse the discovery process (by failing to produce) unless the opposing party proves that the non-producing party had a duty to preserve the evidence at issue.38 In Johnson, a Wal-Mart employee stocking merchandise accidentally knocked a decorative reindeer onto Johnson’s head and arm. The Court held that nothing in the investigation surrounding the accident gave Wal-Mart notice of the Johnson’s intent to sue or that there was a substantial chance that the Johnson would sue. Thus, Wal-Mart had no duty to preserve the reindeer because Wal-Mart did not anticipate litigation.

In the e-discovery context, in Cache La Poudre Feeds, LLC v. Land O'Lakes, Inc., the court held that the duty to preserve was not triggered by “back and forth equivocal letters about a dispute,” noting the “less than adamant tone” of plaintiff’s letters.39 Absent a clear litigation threat, Land O’Lakes did not need to presume litigation, and therefore, there was no duty to implement the legal hold until Cache La Poudre Foods filed the lawsuit. Similarly, Judge Lee Rosenthal has held that e-mail destruction automatic deletion is not sanctionable, absent demonstrated bad faith when good faith was evident in preserving the other potentially relevant data.40

One of the more notable decisions of 2009, Phillip Adams v. Dell, focused on one such hot spot – the issue of when the duty to preserve begins.41 In that case, the plaintiff challenged one of the defendants’ efforts and timing preserving electronic information. The underlying claims addressed whether that defendant reverse engineered plaintiff’s patented programs for solving a defect in floppy disk controllers. When the plaintiff compared the defendant’s produced documents with documents produced in other related cases (involving other defendants), it found the production lacking. Simply, the defendant did not produce enough documents relevant to the dispute. The defendant responded, saying that its servers were “not designed for archival purposes” and it had instructed employees to preserve only e-mail “of long term value” locally. Therefore,

37 2008 WL 3833384 (N.D. Cal. 2008). 38 Wal-Mart Stores, Inc. v. Johnson, 106 S.W.3d 718 (Tex. 2003). 39 244 F.R.D. 614 (D. Colo. 2007). 40 Escobar v. City of Houston, 2007 WL 2900581 (S.D. Tex. Sept. 29, 2007). 41 2009 WL 910801 (D.Utah March 30, 2009).


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only a limited number of documents were available for production. Further, the defendant said that it preserved documents only when it was clear that the company would be sued, and not when the first of these related cases appeared at the courthouse.

The Court disagreed, and held that the defendant had not established “good-faith” in handling data given the threat of potential litigation. The Court specifically noted that the company’s ability to preserve financial data demonstrated that the company knew how to preserve important electronic information. Therefore, the “safe harbor” of FED. R. CIV. P. 37(e) – which prevents judicial sanctions when electronically-stored information is destroyed during the “good faith” routine use of a computer system – did not protect the defendant’s years of data destruction. Notably, even though this particular defendant received a demand letter in 2005 and was not sued until 2007, the Court held that component manufacturers like the defendant “were sensitized” to the floppy disk controller errors by class action lawsuits filed in 1999-2000.

In 2010, two e-discovery heavyweights have chimed in on this very important issue. In two separate opinions, Judge Lee Rosenthal and Judge Shira Scheindlin (of “Zubulake” fame) have attempted to set forth parameters for federal e-discovery (and sanctions). In January, Judge issued her opinion in The Pension Committee of the University of Montreal Pension Plan, et al. v. Banc of America Securities, et al.42 the essential holding of Pension Committee (subtitled “Zubulake Revisited: Six Years Later”) was that the absence of a written legal hold was tantamount to gross negligence with regard to meeting your needs-discovery obligations. The lengthy opinion contains a laundry list of actions and activities which would support a finding of negligence for gross margins under the present set of e-discovery standards. That list includes the failure to:

• issue a written litigation hold,

• identify the key players and to ensure that their electronic and paper records are preserved,

• cease the deletion of email or to preserve the records of former employees that are in a party’s possession, custody, or control, or

• preserve backup tapes when they are the sole source of relevant information or when they relate to key players, if the relevant information maintained by those players is not obtainable from readily accessible sources.

On the question of whether sanctions attach the Court held that:

[The] innocent party must prove the following three elements: that the spoliating party (1) had control over the evidence and an obligation to preserve it at the time of destruction or loss; (2) acted with a culpable state

42 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010) (Amended Order),


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of mind upon destroying or losing the evidence; and that (3) the missing evidence is relevant to the innocent party’s claim or defense.

Relevance and prejudice may be presumed when the spoliating party acted in bad faith or in a grossly negligent manner….

What comes from Pension Committee is the need for a written legal hold. Without such a document, litigants to issue written legal hold notices or face “gross negligence” consequences for spoliation.

One month later, Judge Rosenthal issued her opinion in Rimkus v. Cammarata, which expressly references Pension Committee.43 In Rimkus, the Court discussed the court’s inherent power to sanction – a big issue in e-discovery circles.44 In the end, the judges agreed that the jury should determine whether to consider lost/destroyed evidence as being detrimental to the alleged spoliator. Rimkus, however, does not apply such a strict standard. Instead under Rimkus, the absent clear evidence of “bad faith” a party should not be subject to harsh sanctions, noting that, in applying Pension Committee, “to the extent sanctions are based on inherent power, the Supreme Court’s decision in Chambers may also require a degree of culpability greater than negligence.” Importantly, Rimkus discusses preservation in terms of proportionality, which is logical extension of principles discussed by The Sedona Conference and others.

With these opinions (and surely more to come), counsel must know and be able to implement litigation holds. The basics of a litigation hold include issuing a hold notice, identifying the right custodians (or key players), coordinating data identification and preservation, monitoring the implementation of the hold, and then releasing the hold. Issuing a legal hold is the critical first step in satisfying the preservation obligation. However, even before any hold is needed, all employees should understand the company’s legal hold policy and how to respond to hold notice they receive. Representatives from legal, IT and records management (if applicable) must have a thorough working knowledge of the policy and their various responsibilities under that policy. Once a lawsuit is filed or hold notice issued, the company must suspend its document retention policies to prevent discarding data, and notify employees to refrain from deleting e-mails or other computer documents.

As important as the hold itself is its implementation. A strong hold will have the following characteristics:

• Written record of what has been sent

43 07-cv-00405 (S.D. Tex. Feb. 19, 2010). 44 Much of the initial debate related to Rule 37’s safe harbor dealt with the scope of the protection it

affords. See Brady, Kevin F. What Protection Does Rule 37(f) Provide? Is it meant to be a 'safe harbor' or a 'lighthouse'? August 30, 2007 (found at http://www.law.com/jsp/lawtechnologynews/ ubArticleLTN.jsp? id=1186089401546). I have generally found that it is a bad idea to discuss the scope of the Court’s authority with that particular court, but there is a lot of debate in this area.


http://www.law.com/jsp/lawtechnologynews/%20ubArticleLTN.jsp?%20id=1186089401546http://www.law.com/jsp/lawtechnologynews/%20ubArticleLTN.jsp?%20id=1186089401546

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• Confirmation that the notice has been received

• Confirmation that the notice has been understood

• Follow up in the future with custodians about implementation

• Independent efforts as to the implementation – so that the company is not solely relying on the custodians themselves.

That said, this list is neither complete nor required in every case. (How’s that for guidance?) There is even a debate as to whether the litigation hold is privileged. Capitano v. Ford Motor Co., 2007 WL 586586 (N.Y. Sup. Ct. Feb. 26, 2007). One general approach is to treat the documents related to the hold as privileged, but to draft them as if they were not. After all, there are several situations where you may need to produce those documents to demonstrate your efforts at preservation and production.

5. Dynamic Databases.45

As a general principle, most of the electronically stored information to be produced will be an email or attached to an email. However, not all of it will be, so counsel will need to be prepared to deal with other types of data including dynamic databases. Dynamic databases have become increasingly ubiquitous and provide companies with substantial convenience and efficiencies, but they can complicate discovery. By definition, dynamic database is any database that can constantly change in both structure and content with activity. Most are integral to a company’s daily operations, which makes it difficult, if not impossible, to pull them offline for preservation or production. Because they are used in routine job functions that involve creating, modifying, or deleting data, preserving potentially relevant data is a unique challenge. While several of the steps set forth in other sections of this paper are equally relevant here, there are some unique steps to be considered:

Step 1: Remember the unique aspects of databases. Often no single user can provide complete information on any given database. Therefore, in considering how to produce a particular database, it is important to understand all of the uses for a given database by its users. By reaching out to those users within the relevant groups, counsel can ensure relevant data is properly preserved and ultimately produced.

Step 2: Discuss Databases with Opposing Side. Courts appreciate candor, even though the candid exchange of information between the parties runs counter to the natural inclination of most litigators. Hopson v. City of Baltimore,46 discussed below, is but one example of a court’s examination

45 Portions of this section are adapted from David D. Cross, 10 Steps for Conducting E-discovery

Involving Dynamic Databases, A.B.A. Sec. Litig. Spring 2008, at 4. 46 232 F.R.D. 228 (D. Md. 2005).


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of the changes in the approach in discovery. The more recent Mancia v. Mayflower also counsels lawyers to work together.47

Step 3: Examine Data Dictionaries. A database will typically have a data dictionary that describes the design and structure of the database and all its key characteristics. This dictionary enables programmers and users to identify and understand the fields, codes, procedures, processes, and other information in the system. When such a data dictionary exists, it should narrow the amount of data that the party has to preserve and produce by enabling the requesting party to identify specific data rather than blindly serve over-inclusive discovery requests.48

Step 4: Produce Sample Records and Reports. Sample records and reports can be helpful because they enable the requesting party to determine what fields and codes are actually used in the databases (many fields and codes may appear in a data dictionary, but users often disregard some fields and codes and have their own way of entering or altering data), and the accuracy of labels of the fields and codes (users often enter data that does not correspond to the field or code used because the database lacks a corresponding field or code, and so the users improvise). It may be possible to produce a version of the reports rather than allowing the other side unfettered access to a proprietary database.

Step 5: Estimate Cost. The cost of preserving and producing data within a dynamic database can be enormous—even crippling when compared to the amount in controversy. The volume of data also is a key consideration in determining the potential cost of any discovery effort. (This is another reason to produce reports if that is possible.)

The sum of these steps is that counsel must be prepared to deal with these issues. Ignoring them will only create Pension Committee type problems.

V. Ethical Considerations.

Several issues arise when considering the duty to preserve evidence. Generally, no duty arises before the litigation is filed, threatened, or reasonably foreseeable unless that duty is voluntarily assumed or it is imposed through other means. The duty to preserve documents or tangible evidence in a given instance can arise from the existence of pending, threatened, or reasonably foreseeable litigation. This duty also can arise from a number of other sources, including a contract, a voluntarily assumed duty, a statute or regulation, or an ethical code.49

47 Mancia v. Mayflower Textile Services Co., Civ. No. 1:08-CV-00273-CCB (D. Md. October 15, 2008). 48 In some cases, a data dictionary can be produced automatically, or manually by examining the fields

and codes, or through some combination of automatic and manual processes. Approaching clients before litigation begins might also represent a future cost savings to a thankful client.

49 Trevino v. Ortega, 969 S.W.2d 950, 955 (Tex. 1998) (Baker, J., concurring).


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Given the variety of approaches to these issues applied in different courts, the duty to preserve and the determination of available remedies are dependent on a choice of law analysis. To further complicate the issue, federal courts sitting in diversity disagree as to whether spoliation that occurs during pending litigation is substantive (and therefore governed by state law) or procedural (governed by federal law).50 An in-depth analysis of the choice of law question may be beyond the scope of this paper, but it merits further consideration once these issues arise. That said, as these continue to arise, some consistency has developed, but this analysis is still important.

A. Professional Responsibilities.

There are several sources for the rules in this area. In addition to the applicable case law, the professional responsibility codes have rules which touch upon this issue. The ABA Civil Discovery Standards set forth the general rule on the preservation of documents:

“When a lawyer who has been retained to handle a matter learns that litigation is probable or has been commenced, the lawyer should inform the client of its duty to preserve potentially relevant documents and of the consequences of failing to do so.”51

The ABA Task Force has amended these Civil Discovery Standards to account for electronic evidence. Standard 29 has been modified to provide a checklist of sources of electronic data that should be preserved in order to avoid a spoliation claim. The amendment provides:

Electronic data as to which a duty to preserve may exist—and the platforms on which, and places where, such data may be found—include: (a) Databases; (b) Networks; (c) Computer systems, including legacy systems; (d) Servers; (e) Archives; (f) Back-up or Disaster Recovery Systems; (g) Tapes, disks, drives, cartridges and other storage media; (h) Laptops; (i) Personal computers; (j) Internet data; and (k) Personal digital assistants.52

Other potential data sources include video and webconferencing, company websites, and mp3 players.53 Additionally, the amendment to Standard 29 adds the language, “electronic data as to which a duty to preserve may exist include data that may have been deleted, but can be restored.”54

Voice-mail may also be included in electronic sources for clients to preserve, even though it is not included on the amendment to Standard 29. Voicemail can be 50 See, e.g., Keller v. United States, 58 F.3d 1194, 1197-98 (7th Cir. 1995) (noting the split of authority). 51 Standard 10. Preservation of Documents, ABA Civil Discovery Standards, August 1999. 52 Standard 29. Preserving and Producing Electronic Information. A. Duty to Preserve Electronic

Information, Draft Amendments to ABA Civil Discovery Standards, October 2003. 53 Frazier, Jake and Maher, Heidi, “The X-Files: Issues Surrounding Exotic Forms of Electronically

Stored Information,” Expert Evidence Report, July 23, 2007, Vol. 7 at 383-385. 54 Standard 29.


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stored as e-mail attachments, on personal digital assistances, and cell phones.55 Most businesses, however, typically delete voicemail in a matter of days from the original message. Furthermore, voicemail is easily retrievable from its source, but it is not indexed or readily searchable by any commercially available system.56 Attorneys who want to retrieve any preserved voicemail should ask for it early in the discovery process so that the opposing party is on notice not to destroy it. The preservation letter should also include a request for the switches to voicemail, which provide a time and origin of the message. Businesses should be proactive and expect that a judge will enter a very broad preservation order, instead of waiting for a spoliation instruction to the jury.

Texas lawyers must also follow Rule 3.04(a) of the Texas Disciplinary Rules of Professional Conduct, which provides “a lawyer shall not unlawfully obstruct another party’s access to evidence; in anticipation of a dispute unlawfully alter, destroy or conceal a document or other material that a competent lawyer would believe has potential or actual evidentiary value; or counsel or assist another person to do any such act.” However, the Texas Supreme Court rejected an independent tort of spoliation of evidence, finding that spoliation does not give rise to independent damages.57 The best remedy for spoliation is within the lawsuit affected by the spoliation.58

B. Third Parties.

Generally, there is no duty to preserve evidence related to potential claims against a third party. However, if there is a special relationship between the entity and that third party, there may be some duty to preserve the evidence in question. This special relationship may be attorney-client, accountant-client, or something similar. If that special relationship exists, then a party may be held responsible for the acts of a third party. The existence of that relationship mandates that the potential spoliator take affirmative steps to prevent the destruction of the evidence.

This issue is particularly important in the context of destructive testing. If a party delivers an important piece of evidence to an expert or insurer for destructive testing without properly notifying or consulting the opposing counsel, the party could risk potential exposure to a spoliation claim even if the party is not conducting the tests. In general, courts will hold the party responsible for the destruction or damage of evidence if the party entrusted the person who destroyed or damaged the evidence with that evidence.59

As a side note, there are a limited number of cases involving the spoliation “victim” attempting to claim damages from the third party, independent of any issue with 55 David Sumner and Damon Reissman, E-Discovery May Target Unexpected Sources, Law.com, Legal

Technology, December 4, 2006, available at http://www.law.com/jsp/legaltechnology/pubArticleLTN; Paul D. Boynton, Voicemail Poised to Become the Next Target of E-Discovery, LAWYERS WEEKLY USA, July 2003, available at http://www.lexisone.com/news/nlibrary/ lw070003z.html.

56 Id. 57 Ortega, 969 S.W.2d at 951. 58 Id. 59 See, e.g., Thompson v. Owensby, 704 N.E.2d 134, 140 (Ind. Ct. App. 1998) (finding party culpable for

acts by insurance company).


http://www.lexisone.com/

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the other party in the lawsuit. In those cases, courts have been reluctant to allow an independent tort of spoliation, preferring instead to treat the claim as negligence.60 Given that Texas does not recognize a separate tort of spoliation for parties, it is even less likely that such a tort would be recognized against third parties in Texas.

Recently, there has been a further complication with regard to third parties, specifically third parties which are repositories for emails and other electronic information. In 2008, the Ninth Circuit found that a wireless carrier violated the Stored Communications Act by disclosing the contents of text messages to a subscriber without the consent of individuals who sent or received messages using the city-owned pagers.61 The Arch decision relied heavily on the Stored Communications Act, which prevents such disclosure.62 The City of Ontario (the defendant below) had argued that the wireless company in question was a “remote computing service,” but the Court held that it was functioning as an “electronic communication service.”63 The net effect of this distinction was that individuals sending and receiving text messages have a reasonable expectation of privacy under the Fourth Amendment.

On June 17, 2010, the U.S. Supreme Court reversed this decision on narrow grounds.64 In its analysis, the Supreme Court relied substantially upon a case addressing the application of the Fourth Amendment when the government acts in its capacity as an employer.65 Although the Supreme Court had an opportunity to address the issue of whether providers can turn over the contents of messages without following the Stored Communications Act, it ducked the issue, instead focusing on the government as employer issue. Justice Scalia, writing separately, seems to accept the position that a justified search by an employer would pass muster, but the issue may still be an open one in the lower courts under this opinion.66

C. Managing a Production.

Unfortunately, most times, the attorneys are not called in until litigation has already started. At that point, the client’s in-house attorneys, other outside counsel, IT staff, and key employees, are all critical in locating relevant electronic data. That said, relying solely on the IT staff may be a mistake. The basic function of the IT department is to make sure that nothing is lost. It is not to make sure that only necessary things are kept—which is the goal of a document retention program. As part of an attorney’s role in this process, the attorney should be asking:

60 Elias v. Lancaster Gen. Hosp., 710 A.2d 65, 67-68 (Pa. Super. Ct. 1998) (rejecting the spoliation claim

without the existence of a special duty). 61 Quon v. Arch Wireless, 529 F.3d 892 (9th Cir. June 19, 2008). 62 See 18 U.S.C. § 2702 et seq. 63 Id. 64 City of Ontario v. Quon, 2010 WL 2400087 (U.S. June 17, 2010). 65 O'Connor v. Ortega, 480 U. S. 709 (1987). 66 See Crispin v. Christian Audigier, Inc., 2010 WL 2293238 (C.D. Cal. May 26, 2010) (holding that the

Stored Communications Act was applicable to social networking websites and private messages on those sites, but not posts which are more openly viewable.)


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• How to implement strategic e-discovery plans, including identifying, locating, retrieving, preserving and authenticating electronic evidence;

• What is the most cost-effective means for responding to discovery requests, with requests with minimum disruption; and

• What are the special considerations for the responses and objections to interrogatories and requests for production.

Given these challenges, it is often advisable to hire an expert on these types of issues at a very early stage.

Ignoring systems that are antiquated, damaged or burdensome to be searched may also put you in hot water with the courts.67 There are a number of experts that are well-equipped and professionally trained to work with these types of systems so don’t assume that you can use the seemingly inaccessible nature of the data as a defense. The important thing to do is get involved with experts early to determine what can and can not be done with your data and systems.

The amount of data that is potentially relevant is often underestimated at the start of discovery projects, and if the Court issues an order directing retrieval of a document originally not produced, it could give the appearance of impropriety and may lead to sanctions. It is critical that practitioners understand these nuances before agreeing to any protective orders or production schedules. The cost ramifications can be significant.

It is critical to understand where relevant data is stored and how much data is at issue. Even before a lawsuit involving electronic data is commenced, in-house and outside counsel should understand how their company’s information systems are set up, and what procedures are in place to store—and destroy—electronic data.

It is important to emphasize the difference between electronic data and paper documents.68 Unlike shredding or burning a paper document, using the “delete” key does not necessarily discard an electronic document. The electronic document is likely to reside in various locations. Additionally, embedded information called metadata is contained in electronic documents. The metadata does not appear on paper documents or

67 One particular type of media that warrants additional discussion is backup tapes, which were designed

for recovering information in the event of a disaster, not for litigation purposes. As a result, data is not organized in a document production-friendly manner. In fact, e-mail, accounting, word processing documents, and databases information are often commingled on the same tapes making it more difficult to locate the key documents you are looking for. Another aspect of backup tapes that makes them a significant challenge with regards to litigation is that these tapes are generally rotated every 30, 60, or 90 days. Failure to halt these policies immediately on anticipation of litigation will result in lost data and subject the company to potential spoliation sanctions. See E*Trade Sec. LLC v. Deutsche Bank AG, 230 F.R.D. 582 (D. Minn. 2005) (noting that the failure to preserve DVDs containing voicemail and backup tapes warranted sanctions).

68 See Robert A. Creamer, Ethics and Lawyer Liability Issues in Electronic Discovery (May 13, 2005) at 1-2 (on file with author).


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on the computer screen. It allows an expert to determine what edits were made to the documents, how many versions are in existence, and the date and time of creation.69

Also, a significant difference between discovery of paper documents and discovery of electronic documents is the organization of each. The process by which team members organize paper documents differs from the organization process involving electronic documents. Since electronic documents can be searched by name, key phrase, or date, one has the ability to organize the document review chronologically, by sender, or by conversation topic. The headache of sorting through documents as they appear in a pile is somewhat eliminated.

That said, electronic documents are not always easier to sort than paper. A common dilemma one may encounter is legacy data. Legacy data cannot be read by the software used to review the documents. This problem occurs because of the IT staff’s tendency to often upgrade or replace software. The software that can read the older documents may not be available immediately.

In sum, gone are the days when paper documents were found only in someone’s office or briefcase. Today it is not uncommon for individuals to secretly carry around slim thumb or lipstick drives—which, despite their small sizes, can hold hundreds of thousands of pages of data. In the much publicized Kobe Bryant case, District Judge Terry Ruckriegle ordered AT&T to turn over text messages that were sent from the cell phone of the woman who accused Bryant of rape and that might be “highly relevant” in determining whether Bryant is guilty. As these situations demonstrate, data can be found in many different places today and on an increasing number of devices. The most common locations are desktop and laptop computers, network hard drives, removable media (floppy disks, tapes, CD-ROMs, thumb or lipstick drives), back-up tapes, personal digital assistants and cell phones. Third parties, such as Internet service providers, may also be in possession of data.

D. Types and Amount of Data.

Determining what type(s) of data you will be producing—and how you will produce them—is imperative. Are you only producing e-mails, word processing documents, spreadsheets, database information, or a combination of these types of data? Once you know this, you will need to determine what packages and versions of software were used in creating this data. For example, is the e-mail Microsoft Outlook, Lotus Notes, Groupwise, etc. The type of data can have bearing on exactly what can be done with the data in the filtering and processing stages, and not all e-discovery vendors have the capabilities to work with all software packages and versions. For example, the 2007 Fulbright Litigation Trends Survey noted that more than half of the survey respondents allowed instant messaging and almost three quarters allowed employees to access the

69 In March 2005, the New York Times reported that the BTK was caught, in part, because of metadata

on a disk he had delivered to a local television station. The police used the disk to track BTK to a local church, and to Dennis Rader, president of the church council, who had recently used the computer. Monica Davey, Computer Disk Led To Arrest In Killings, Pastor Says, NEW YORK TIMES, March 2, 2005, at A 12.


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computer from home.70 These concerns will be important for companies to address when determining the scope of the issue.

The amount of data that is potentially relevant is often underestimated at the outset of electronic discovery projects, especially by those who have little or no prior experience with electronic evidence. There are a few reasons for this. First, employees create more electronic information than you think. And second, people assume that “e-phobic” individuals are not using their computers when in fact their assistants are retrieving and responding to e-mail on their behalf. Keep in mind, if the Court issues an order directing retrieval, or worse yet, the opposing party happens to have e-mail from that individual and those records were not produced, it could give the appearance of impropriety and may lead to sanctions. If you do not have an understanding of how much data you are working with, e-discovery experts can help you estimate page counts based on their experiences if certain information such as the number of custodians (the persons, places or things from which the data was derived) and the type of media is known.

E. Data Collection.

Not many years ago, the destruction of documents meant simply throwing them in the trash or running them through a shredder. Today, the question of whether a document was destroyed or tampered with demands more consideration. Computer users destroy and alter electronic data every day, and often without knowledge. Simply turning on a computer can overwrite documents such as those in “slack” and “temporary” files. And just clicking on a file can change the document’s metadata (data about the data) such as the “last-accessed” date.

So how can you avoid spoliation issues when data may be relevant to a lawsuit? Best practices dictate that you immediately make a copy of relevant data using mirror-imaging technology and halt electronic document-destruction processes such as the recycling of backup tapes. Mirror imaging creates a copy of every sector in the computer’s hard drive. This is very different from simply copying every file, which may result in alterations such as those listed above. While many internal IT departments are familiar with mirror imaging technology, e-discovery experts can also assist you in securing this data and explaining what actions could potentially cause spoliation. An added benefit of working with an outside expert to perform mirror imaging services is that you have independence in the process, lessening the chance of any questions of impropriety.

Those of us who breathe this stuff every day know that mistakes made at the start can be very difficult (read: expensive) to fix later. The following mistakes are adapted from an article in Kroll OnTrack’s monthly newsletter.71 Each project (and its incumbent

70 Fulbright & Jaworski’s 4th Annual Litigation Trends Survey at 23 (available at

www.fulbright.com/litigationtrends). 71 Kroll OnTrack, Practice Points: Top 10 Data Collection Pitfalls, CASELAW UPDATE AND E-

DISCOVERY NEWS, April 2005 (found at http://www.krollontrack.com/newsletters/clu/apr05.pdf).


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challenges) will be different, but this list is a solid beginning as to the concerns practitioners might face and pitfalls they should avoid:

1. Failing to Have a Data Collection Plan. Having an initial data collection “plan of attack” is vital in every electronic discovery situation.

2. Failing to Prioritize the Data. Clearly defining the collection scope and priority of key players will avoid creating unnecessary delays and increased costs down the road.

3. Neglecting to Conduct Thorough Interviews. Counsel must make it a priority to thoroughly interview the IT team regarding the client’s IT systems.

4. Ignoring Key Data Locations & Important File Types. Often, it can be difficult to ascertain where electronic evidence is held.

5. Conducting Do-It-Yourself Data Collection. Many software products allow a client to collect data themselves. This is, unfortunately, the fastest way to create significant problems for the client several months later, when the problems can no longer be fixed.72

6. Performing Dangerous Desk-side Collection. Courts have consistently held that diligent and effective ESI preservation and collection efforts are required under the new Federal Rules of Civil Procedure amendments.73

7. Failing to Mirror Image v. Imaging Excessively. Remember that this area of the law is new and, to some extent, untested. Unfortunately, the person grading performance does so two years after the acts were completed, but with proper documentation, clients can achieve good results.74

8. Limiting Names. When collecting data, consider alternative names, including maiden names, initials, nicknames, e-mail addresses, and everything else. I have learned this the hard way.

9. Assuming IT Can Shoulder the Burden Alone. Kroll notes that IT does not always understand how to best handle data subject to legal discovery. I could not agree more.

72 This portion of the paper is adapted from The Perils of Custodian Self-Collection, EnCase Legal

Journal, January 2008, at 118. 73 See, e.g., Samsung Electronics v. Rambus, 439 F. Supp. 2d 524 (E.D. Va. 2006); Cache La Roudre

Feeds, LLC v. Land O’Lakes, inc., 244 F.R.D. 614 (D. Colo. 2007); In re Hawaiian airlines, Inc., 2007 WL 3172642 (Bkrtcy. D. Hawaii October 30, 2007); Google Inc. v. Am. Blind & Wallpaper Factory, Inc., 2007 WL 1848665 (N.D. Cal. June 27, 2007).

74 See Galvin v. Gillette Co., 2005 WL 1476895 (Mass. Super. May 19, 2005) (Court holds that e-mails need not be produced where Gillette demonstrated that compliance would be “daunting” and nearly impossible).


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10. Failing to Maintain Proper Chain of Custody. Proper documentation includes indicating where the media has been, whose possession it has been in, and the reason for that possession. If you do this incorrectly, you might not be able to fix it.

When hiring an outside expert to perform your data collection, you will need to provide them with information about what they should expect onsite:

• Where, and in how many locations, is the data stored? • When will the collection take place? • What types of hardware, operating systems and software are involved? • How many drives are going to be imaged?

F. Filtering

Not every electronic document found on a custodian’s computer or on backup tapes is responsive or relevant to a discovery request. Therefore, data filtering is a must. In fact, there is a cost to handling too many documents. Most e-vendors will charge by the document or page (although they vary on when in the process the cost is assessed). Also, the more documents you do not eliminate through some other measure, the more time your people will spend reviewing documents. This cost is not one to be underestimated.

If the amount of data collected in the steps above brings up questions like, how are we going to review and produce all of this data by our discovery deadline, don’t panic. One of the characteristics of electronic data that can make your life easier is the ability to filter your documents. Filtering techniques extract documents based on specific dates, custodians, keyword searches, and file types, and they also offer de-duplication options so that you do not have to review the same document twice. Effective filtering parameters can reduce your data by an average of 75 percent, which often results in significant cost savings through lower processing costs and more efficient document review.

When you get to the filtering stage, you will need to make several decisions:

• What dates are relevant to your lawsui

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